Friday, October 24, 2008

A tour of the NYSE

From the BBC - here is a short video of a broker giving us a tour of the floor of the NYSE. You'll note that it looks pretty quiet - that's because a great deal of the volume now bypasses the floor brokers and is handled electronically.

Still, interesting stuff if you've never seen what a specialist looks like.

Wednesday, October 22, 2008

Next in line for blame - credit rating agencies

A student of mine told me about this - as we expected, and predicted, credit rating agencies were just in it for the money. Who would have thought?

I wrote earlier that credit rating agencies seem to be run like protection rackets..

from CNBC

In a hearing today before the House Oversight Committee, the credit rating agencies are being portrayed as profit-hungry institutions that would give any deal their blessing for the right price.

Case in point: this instant message exchange between two unidentified Standard & Poor's officials about a mortgage-backed security deal on 4/5/2007:

Official #1: Btw (by the way) that deal is ridiculous.

Official #2: I know right...model def (definitely) does not capture half the risk.

Official #1: We should not be rating it.

Official #2: We rate every deal. It could be structured by cows and we would rate it.

A former executive of Moody's says conflicts of interest got in the way of rating agencies properly valuing mortgage backed securities.

Former Managing Director Jerome Fons, who worked at Moody's until August of 2007, says Moody's was focused on "maxmizing revenues," leading it to make the firm more "issuer friendly."

Monday, October 13, 2008

Stay the course...says Malkiel

Burton Malkiel author of a "Random Walk Down Wall Street", advocates very clearly that we should stay the course. Don't try to market time.

It is very tempting to try to time the market. We all have 20/20 hindsight. It is clear that selling stocks a year ago would have been an excellent strategy. But neither individuals nor investment professionals can consistently time the market.

I agree. Right now is the time to be shoveling money into stocks. They look cheap. Very cheap. (except GM and Ford that is).

HT: Greg Mankiw's Blog

Thursday, October 2, 2008

March Madness in September

This "bracket" has been making the rounds. A student sent it to me, and I've also seen it on Greg Mankiw's blog.

Its amusing enough, except that the creator spells Barclays wrong. Call me finicky, but its not like Barclays is some sort of washed up has been, like, er, Leeman Brothers.